The Third Industrial Revolution

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Adidas’s high-tech factory brings production back to Germany and America

BEHIND closed doors in the Bavarian town of Ansbach a new factory is taking shape. That it will use robots and novel production techniques such as additive manufacturing (known as 3D printing) is not surprising for Germany, which has maintained its manufacturing base through innovative engineering. What is unique about this factory is that it will not be making cars, aircraft or electronics but trainers and other sports shoes—an $80bn-a-year industry that has been offshored largely to China, Indonesia and Vietnam. By bringing production home, this factory is out to reinvent an industry.

The Speedfactory, as the Ansbach plant is called, belongs to Adidas, a giant German sports-goods firm, and is being built with Oechsler Motion, a local firm that makes manufacturing equipment. Production is due to begin in mid-2017, slowly at first and then ramping up to 500,000 pairs of trainers a year. Adidas is constructing a second Speedfactory near Atlanta for the American market. If all goes well, they will spring up elsewhere, too.

The numbers are tiny for a company that makes some 300m pairs of sports shoes each year. Yet Adidas is convinced the Speedfactory will help it to transform the way trainers are created. The techniques it picks up from the project can then be rolled out to other new factories as well as to existing ones, including in Asia—where demand for sports and casual wear is rising along with consumer wealth.

Currently, trainers are made mostly by hand in giant factories, often in Asian countries, with people assembling components or shaping, bonding and sewing materials. Rising prosperity in the region means the cost of manual work outsourced to the region is rising. Labour shortages loom. Certain jobs require craft skills which are becoming rarer; many people now have the wherewithal to avoid tasks that can be dirty or monotonous.

Adidas’s motivation for its Speedfactories, however, goes well beyond labour cost. People want fashionable shoes immediately, but the supply chain struggles to keep up. “The way our business operates is probably the opposite of what consumers desire,” says Gerd Manz, the company’s head of technology innovation.

From the first sketch of a completely new pair of trainers to making and testing prototypes, ordering materials, sending samples back and forth, retooling a factory, working up production and eventually shipping the finished goods to the shops can take the industry as long as 18 months. Yet some three-quarters of new trainers are now on sale for less than a year. An order to replenish an existing, in-demand design—the latest edition of the NMD R1, say, a popular trainer in 2015-16—can take two or three months to reach the shelves, unless the shoes travel not in a shipping container but at huge cost in the hold of an aircraft.

On your marks…

The Speedfactory’s main strength is to shorten the supply chain, and so the time to shops, to less than a week, perhaps even to a day, once the trainer design is complete. The design process itself is increasingly done digitally. The trainers are not just styled on a computer screen but can also be tested by the computer for things like fit and performance. To enhance the process, the Speedfactory will also have a digital twin: a virtual computer model in which production of the new trainers can be simulated. Once all is well, the digital product will then move to the physical production system.

Adidas claims its new production system is extremely fast and highly flexible. The details are being kept secret for now. What is known, however, is that instead of ordering components that will be assembled into a new pair of trainers, the Speedfactory will instead make most of the parts itself from raw materials, such as plastics, fibres and other basic substances.

The machines carrying out this work will be highly automated and use processes such as computerised knitting, robotic cutting and additive manufacturing, which involves building up shapes layer by layer. Industrial 3D printing machines are appearing in many different forms and are capable of handling an increasing variety of materials. Driven by software, the robots, knitting machines and 3D printers take their instructions directly from the computer-design program, so they can switch from making one thing to another quickly, without having to stop production for what can amount to several days in order to retool conventional machines and instruct manual workers.

Not every job in the Speedfactory will be automated. Robots can be slower and less precise at some tasks, such as the final shaping of a shoe. So each Speedfactory will create 160 production jobs, compared with a thousand or more in a typical factory in Asia. The new functions will also be more highly skilled. Adidas wants the new plants to complement the Asian operations, not to compete with them. But as advanced manufacturing expands, the need for armies of manual workers in Asian factories will surely diminish.

Sneakerheads are likely to approve. “This will lead to products that will look and perform differently,” says Mr Manz. Leaving behind manual production methods will allow Adidas to come up with novel shapes and finishes. One new material the firm has already experimented with is Biosteel, a synthetic silk made by AMSilk, a German biotech company. Production will also become more customised, perhaps even with bespoke trainers fashioned from a computer scan of how a person walks or runs.

In such a competitive and trend-driven market, one thing is certain: Adidas’s arch-rival Nike will not just sit on the touchline. The American company faces similar cost increases in Asia and is equally keen to shorten the time it takes to get new products to market.

One of its initiatives is a form of computerised knitting to make the upper parts of a range of trainers it calls Flyknit, much like the way a sock is knitted. Nike has also set up what it calls an Advanced Product Creation Centre at its headquarters in Beaverton, Oregon, to explore other automated production methods, including 3D printing. The company has already employed these techniques to produce customised shoes for some top athletes. The race between the world’s biggest sports-shoe makers is about to become much more fleet of foot.

Paul Markillie is Innovation Editor of The Economist. He specialises in writing about emerging and disruptive technologies. His special report “The Third Industrial Revolution” was published by The Economist in 2012 as a cover story and attracted international interest. Other more recent reports include "Knit me a car", a special report on new materials in manufacturing. His previous special reports have included carmaking, aerospace and logistics. Paul was The Economist’s first Asian Business Correspondent, based in Hong Kong, and also served as Asia Editor.